Chang Sun's wife is HIV positive. So is his mother. So is his aunt. So is his cousin and his cousin's wife. So is the woman next door and, probably, so is her husband. In fact, it is quite possible that almost every adult and many of the children in his small, remote village are infected.

And then, there are those who lie in the flat, brown vegetable fields, which are steadily filling with mossy green burial mounds.

Among them is Chang's father, who died of Aids last year, and his three-year-old daughter, who succumbed the year before that. His first wife is there too - she threw herself down the village well in 2000 after a doctor told her she was no longer worth treating because she had the virus.

Another plot will soon be needed. As we walk furtively to Chang's home under cover of darkness, the crackling of firewood in a neighbour's yard reminds him that a traditional wake is being held for the latest son to be lost to the disease, the 10th victim in the village this year.

"It is our custom for strong male adults to carry the coffin, but so many people are sick or dead that there aren't enough of us left," says the 35-year-old farmer. "So now it is the old people who are doing the burying."

This is Xiongqiao village in Henan province, the ground zero of arguably the world's worst HIV/Aids epidemic, with up to a million people infected in this single province through a vast, largely unregulated blood-selling operation.

The situation is already a catastrophe, but the risks are growing. The medical treatment is inadequate and the authorities are trying to cover up the truth with a lethal mix of censorship and police intimidation.

The Guardian has gained rare access to the village and has spoken to HIV-positive villagers who have been arrested and beaten for trying to draw attention to their plight; to health officials who have been harassed, sued and kept under surveillance for speaking out; and to local newspaper reporters who have been fired for trying to publish the truth.

It has also heard from Aids experts, charity organisations and foreign diplomats who have either been refused access to Henan or only allowed to enter under heavy restrictions.

Outside journalists fare little better: two cameramen from China's state-run television channel, CCTV, were kicked out this week.

The problem and response are side-effects of modern China's peculiar blend of profit-at-all-costs capitalism and hide-and-control communism. Even more than the Sars scare this year, the HIV crisis in Henan underlines the growing gulf between the urban rich and rural poor and the state's overarching emphasis on social stability at the expense of individual rights and free speech.

Impoverished

It was almost inevitable that the outbreak occurred in Henan. Here in the most populous and impoverished of China's provinces, life is cheaper than almost anywhere else in the world. The average Henan farmer survives on 46 pence per day.

When local health authorities were suddenly told to start making profits in the late 1980s, as part of the country's drive towards capitalism, Henan's officials turned to almost their only untapped resource: the blood of the province's 90 million population. Vans were converted into mini-clinics and driven out into the countryside. Ambitious peasants established themselves as "bloodheads" (brokers) to meet the demand among both buyers and sellers.

For an 800cc donation, villagers were paid 45 Renminbi (RMB, about £3.50), enough to feed a family for a week. Realising that they could get far more for milking their veins than for tending the land, they lined up day-in and day-out for years to make donations. By the peak - around 1995 - Henan had become the nation's blood farm.

"Almost everybody did it," said Chang's cousin, Ming.

"We would sell extra if there was a marriage ceremony coming up or if we wanted to build a house. The most I ever did was four donations in a single day."

The system had been adapted so that villagers could give such huge amounts of blood without suffering anaemia. After extracting plasma from each 800cc donation, the collectors would pump 400cc back into the arms of the donors. It is believed that people's blood often got mixed up in this way, spreading HIV to almost everyone involved.

Ming started to show symptoms of Aids in February and now spends most of his time lying on a bed held together by string, watching snowy black-and-white TV images on an old television set. Under a single naked light that illuminates the fading newsprint that serves as wallpaper, he says he has only lasted so long because the central government began providing free retroviral drugs this year.

After years of denial, the health ministry in Beijing has recently started to face up to the problem in Henan. Officials cautiously acknowledge that tens of thousands of people may have been infected. Although the government dodges the question of responsibility, steps are being taken to ease the suffering of the victims.

As well as the free medicine, money has been provided for HIV clinics and plans are mooted for free education and tax breaks for the growing number of Aids orphans and widows in Henan. But villagers say the authorities are still covering up the enormous scale of the outbreak. Based on the proliferation of blood collection units in the mid 1990s, Aids activists estimate that more than a million people in Henan were contaminated.

"If you sold blood, there is a 90% chance of infection," said a local man. "But people don't want to know. My wife is now sick, but is afraid to take a test."

The disease is also spreading across generations. At a nursery school for orphans in Houyang, all the 38 children have at least one parent who is HIV positive, many of whom are likely to have passed on the disease during birth. Only three of the five and six-year-olds have been tested, but all three were positive.

The founder of the school, Chen Xiangyang, said one girl is now sick. "Her mother died of Aids and her father ran away after he tested positive. We don't tell the children even if they have the disease; we try to make them as happy as possible."

In remote villages like Xiongqiao, which has no road and only one telephone, residents say they are being neglected because corrupt local officials want to play down their own accountability.

"The headman told us that he doesn't want us to get the reputation as an 'Aids village' but it is a fact that almost everyone here has the disease," said Chang. Other villagers said their claims for the benefits due to HIV sufferers have been turned down.

Tempers snapped in June, after four villagers died of Aids in less than a week and two residents were detained by police on their way to petition the provincial government for help. The arrests sparked China's most violent Aids-related confrontation. Almost 100 villagers overturned an official's car and marched on the village headman's office to protest against their lack of health care. The authorities' response was swift and bloody: two days after the demonstration, 600 baton-wielding police stormed the village, battering down doors, smashing windows and beating residents, including HIV-sufferers, children and Chang's 56-year-old mother, who says she still feels pain in the arm they broke.

Death and darkness fill Chang's house, which was built with money he made from selling blood. The mood is set by the black-framed picture of his father who died last year, and in the funeral poems - "The wide land weeps for those we have loved and lost" - to his first wife and child which are pasted to the walls. It also seems to have taken liquid form in a murky bottle of traditional medicine that is all he and his mother have to ward off Aids.

Negative

Astonishingly, Chang tested negative for HIV. He does not believe the results, nor has he changed his lifestyle despite being remarried to a HIV-positive wife from a neighbouring and equally infected village.

"Everyone in my family has HIV. Why should I be different?" he says.

It is a view shared by many - not least because they cannot afford the 3Rmb price of a condom, equivalent to half a day's wages. Also to blame is a lack of Aids education in the villages by Henan officials who would rather ignore the problem than teach people how to deal with it.

The consequences for China will be devastating as many infected villagers are migrating to work in Beijing and other big cities. "It is now too late to stop the spread of the disease," said Gao Yaojie, the most outspoken advocate of a rethink of China's policy on Aids.

Overseas, Ms Gao has won awards for her efforts to raise the problems of Henan. In China, she has been denied a passport, had her phone bugged and been placed temporarily under house arrest. Numerous others who have tried to raise the problem have encountered similar problems. Last year, a local doctor - Wan Yanhai - was detained for allegedly passing out information about the scale of the epidemic. A journalist, who asked not to be named, said he had been fired by three different newspapers in Henan for trying to get the story published.

On the way from the city, a few hours drive from Xiongquiao, I asked a taxi driver if she was aware of any HIV cases in the province.

"No, no, definitely not", she replied. "That is just wicked rumour mongering. We have no Aids here. You don't have to worry. Trust me. A taxi driver knows these things."

Secrets, lies and damning statistics

· China refused to accept that it had a major HIV problem until 2002. Then in a single day, it pushed up its estimate for infected people from 30,000 to 1 million. Aids activists believe the real number could be more than twice as high

· Last month, Human Rights Watch issued a report condemning China's policy on HIV/Aids. Few Chinese people saw it because the government blocked the group's website

· In international forums and English language media, Chinese officials acknowledge that the country could have 10m HIV cases by 2010. In the domestic Chinese language media, however, officials cite infection figures as low as 40,000

· Asked why the cover-up is necessary, an official in Henan told doctors: "Who will invest in our province if they believe we have a huge number of HIV cases"